Hello Friends,
I have substantial investments in the stock market through Zerodha. It has been quite a happy experience with them so far.
Additionally, I have invested in different equity and debt mutual funds through Zerodha Coin, heavily. However, here I have always felt that their cut-off time of 1.30 PM is too early for the day. Often, the trend of the stock market changes after 2.30 PM, so investing by 1.30 PM is almost like a blind investment. If the cut off time is at 3 PM, you have a clear idea whether you wanna buy mutual fund that day or not (with all due respect to SIP supporters,the point here is about lump-sum investors only).
So far, I was trying to work around this issue with some hassle. But now, many of my friends are moving from Zerodha to a new mutual fund investment platform named āGROWWā. There, the cut off time is at 3 PM for equity mutual funds and the other facilities are same. They also have some additional features such as, star rating and pros/cons of funds which is useful. My friends now strongly recommend this app only for mutual funds.
This has put me in a fix. Transferring all of my investments in mutual funds from Zerodha to GROWW would be a hassle. Zerodha is quite familiar for me, so bit of inertia is also there. Yet, the 3 PM Cut Off Time is quite attractive and would be a big help.
Therefore, would you people please give some pointers to help me make a decision on this? Should I move to GROWW or stay put in Zerodha? Are the Zerodha owners thinking of increasing the cut off time to at least 2.30 PM by any chance?
Hmmm, this is one of those common foibles. If you are investing for the long-term, and I am assuming thatās what mutual funds are, this makes ABSOLUTELY no difference. Hereās the data. However, if you are doing tactical investing, which I am guessing not, because it is not possiblee with mutual funds, you are better off with ETFs. https://stockviz.biz/2018/10/04/systematic-buy-the-dip-an-update/
I didnāt get this. 1.30 is blind but 2.30 is eyes wide open?
Star ratings are totally useless. ALL star ratings are based on based past returns and past returns historically have been poor predictors of future returns. If you go look at all the funds that were affected by the DHLF and IL&FS crisis, most of the funds were rated 5 starts. And some of these funds fell by as much as 50%. Moreover, the 3 different ratings providers - Morningstar, VR, CRISIL rate funds differently. A fund might be rated 5stars by Morningstar but rated 2 by CRISIL, how will you decide? You have a better chance of picking a fund by closing your eyes and placing your finger on a list of funds.
There were 2 ultra-short funds which fell about 5% in a week, that were rated 5 stars. 5% is how much you make in a year in a ultra-short fund. So, 1-yearās worth of returns were wiped out in a week. Anyway, if you want more data on why star ratings are useless, hereās an extensive article: https://www.wsj.com/articles/the-morningstar-mirage-1508946687
What pros and cons? If selecting a MF was as easy as reading pros/cons, everybody would be a millionaires. These are all eye candy features which add ZERO value!
Bottom line: star ratings, pros, cons, cut-off times makes ZERO difference in the long run. I can post a mountain of more data. All this is plain useless, keep investing in a disciplined manner as per your goals and get your asset allocation right which is a billion times more important than these other pointless things.
The link on star ratings from āWSJ article on Morningstarā is a good one. Agreed, there are other variables that affect the fund performance, nevertheless, the star rating gives you a basic idea. This is what Morningstar argued once and later used this data in its reply to WSJ.
A compare fund option with several of their features would be a better option on Zerodha. I hope they are working on it and would bring in its future upgrades.
On cut off time, I differ with your point. 1.30 PM is too early cut off time to place a buy/sale order in a mutual fund. Most of Zerodhaās competitors, whether its HDFC Securities, 5Paisa, Growwā¦all keep it till 3PM.
Even if Zerodha argues that it cant stretch it up to 3PM because of BSE STAR, an effort to move the cut off time up to 2.30 PM will be a major improvement and a big selling point.
You may strive to trivialize the issue but itās making a difference in publicās choice while opting for options to purchase mutual funds. Indian investors may think long term but the order dayās NAV matters to them. Thatās the reason I am hoping this issue will be clarified and resolved by Zerodha.
Can you give an example of this. I mean can you provide a concrete real life example as how the cut off time will have a huge impact on your returns? How can it be a big help?
I m also a investor via coin.
I really would like to know how ābigā of help it is?
We are working on adding better data points and features to help discovery.
Yep, this is on our list of things to do.
It actually isnāt, this is after speaking to our users. Weāll, however, look into this. But if you are actually making long-term decisions, it doesnāt make a difference. Thereās plenty of data out there.
The best investing outcomes are achieved when you just automate and ignore everything. Out of sight out of mind.
Thanks Bhuvanesh!! Glad to know that upgrades are coming in coin. More the merrier !!
Please look into increasing the cut off time. If you need more feedback on it, ask some of the people who have recently (last 1-2 months) moved their mutual fund portfolio to different platforms from Zerodha. You will get a better appreciation of the issue.
This would be a big help, esp for newbies. And has been long awaited on Coin. I too had made similar points in the past.
This may or may not be a āmajor improvementā. However, clearly a later investment time is technically feasible and has been available with other platforms. What this does is allow investors greater flexibility with their investment decisions. For e.g. I at times have forgotten to place orders in coin by 1.30, and as a result end up not being able to invests. If this cutoff was say 2.30, I would most likely have had time to invests. Also, it helps with funds management ā I can chose to prioritize direct investments depending upon the markets that day or put money in MF.
If market falls like the one on budget day, it is easy for people to invest lumsum on the same day before 2:30. Actually i missed it last week due to cu-off at 1:30. I just realised it what was my mistake. ordered at 3 on that Monday.
IS there any real technical or timeline problem for zerodha to change it from 1:30 to 2:30 or 3 PM. just would like to know.
Please change the timing to 3pm. For a small section of zerodha users sending orders @3pm would be a huge benefit. Not everyone invests with long term investment in mind. Also could you please share what are the advantages of sending in orders at 1:30? Does the exchange reject orders sent at 3pm?
Thanks. @siva-reddy
Many are not like long-term focus. Take a look at any index fund nav between 3-feb and 4-feb. it is approximately 2%. just looking for an option to gives us extra time to wait till market close.
@hawkgaze is simply asking that when the Mutual Fund investment rule book and the industry standard is cut-off 3PM, then why is Zerodha forcing investors to place the order by 1:30 PM. More than whether it is benefiting or is insignificant to the investor, āwhy is it soā is the question - if there is any technical difficulty faced by the coders to implement it (accept, acknowledge and admit it then) or if there is a lack of intent from the Zerodha management (why is it so is the next question in that case), all these are a different discussion altogether.
He is simply asking for equality in terms of the cut-off time when compared to the other MF investment websites and apps. Let me articulate this in simple words - consider a T20 cricket match, but if you are playing at Chinnaswami stadium, an over would be of 5 balls only. Thatās it! Nothing less, nothing more. I hope you understand the point.
Earlier, I have also mentioned the same and many drawbacks of Coin (feature comparison with the other MF platforms) in this post:-
The exchange (BSE STARMF) has 2 cut-off timings. One is at 2:30 and the other is at 3 pm. For equity orders above 2Lakhs, the cut-off time is 2:30 and if the amount is Rs 2Lakhs the cut-off is 3 pm. We have kept a buffer period of 1 hour to fix issues and ensure that orders are processed on the same day. Weāve faced issues on the exchange platform because of which we could not upload some orders on time before the cut-off Hence, we decided to keep the cut-off at 1:30 pm for all orders. Since almost 80-90% of all orders on average are SIPs we want to ensure there are no hiccups right before the cut-off
Ok, I didnāt understand the analogy t20 =investing?!. Like I said earlier, if you are investing for the long term, it makes 0 difference. Thereās a mountain of research and studies out there to prove this. If you still want to ātimeā the markets, you can use the conditional orders feature on Coin.
Having said that, weāll look into the possibilities.
dear @Bhuvan, if it is technical issue, then it needs to be resolved through tech only. Not at the cost of investors compromising on time window to invest.
Let me help you understand with another example. Say, in your office there is a canteen where lunch is served till 3 PM. But for you lunch time is only till 1:30 PM. You canāt place an order for lunch after 1:30 PM while your colleagues can order till 3 PM. Does this make sense?
This is a better answer.
If I were the Product head of Coin, I would brief the development team that we have to make an equal level field for MF investors as per the industry standards. We canāt compromise on technology resulting in order failures which put Zerodhaās reputation and investorās trust on stake. At the same time, we canāt make an investor compromise on order placing cut-off time and lacking basic features like STP, SWP etc. I would have said we have to solve this not because I am saying this to do so. But citing the above example of lunchtime, they would get the message and Iām sure the development team would surprise us.
Not only cut-off time but an equal level field overall in terms of STP, SWP, etc features which are lacking in Coin for long and it is testing a Zerodha userās patience. I remember earlier @nithin had mentioned that only 4 people team is working on Coin. Thatās a great feat individually that the fantastic fours have delivered so much. But as a company, is that enough? People donāt care whether it is being made by 4 people and so we have to live with the limitations, that too when they are paying their AMC on time, they would expect the service to be delivered as per industry standards.
I have said enough, time and again, so I would rest my case.
While I understand your limitations around technical hiccups, your above argument appears to be escapist. There is equivalent tonne of research that says most investors (super large SWFs to tiny retail) would be better off investing in ETFs instead of a jamboree of investment alternatives currently used. Despite this, there is a healthy and active market for direct investments, advisor / manager fraternity because we all believe we are better than everyone else.
As regards cut off times, all what has been asked for is parity with others. If one were to extend your argument, it should not make a difference to an investor if the cut off time is 9.30 am the day before or 2 days before - except in this case you would have seriously disgruntled customers.
To each his own and if an investor expects a certain cut off time for reasons best known to him, then its a fair ask.
If selecting a MF was as easy as reading pros/cons, everybody would be a millionaires. These are all eye candy features which add ZERO value!